Monthly Rent vs Jeonse: Opportunity Cost Calculator

"Is jeonse always the better deal?" Compare monthly rent that is gone for good with the loan interest and the opportunity cost of the lump sum tied up in a jeonse deposit. (Jeonse is the Korean lease where you pay a large deposit instead of monthly rent.)

Own-capital opportunity cost 3.5%/yr (bank deposit rate) Analysis Loan interest + sunk cost

AMonthly rent terms

Rent deposit ₩10,000,000

Monthly rent ₩600,000

BJeonse terms

Jeonse deposit ₩150,000,000

Deposit financed by loan 80%

Jeonse loan rate 4.2%/yr

Adjust the terms and press "Get the final verdict" to see the real monthly cost comparison here.

How it is calculated

Both sides count only money that never comes back. Deposits are returned, but the interest they would have earned on deposit (assumed 3.5% a year) is lost, so it is charged as an opportunity cost. Monthly-rent cost = rent + deposit × 3.5% ÷ 12. Jeonse cost = loan × loan rate ÷ 12 + own capital × 3.5% ÷ 12. The result compares the two as bars, in units of 10,000 KRW to one decimal place, with a verdict naming the cheaper option and the gap. It opens with a 10,000,000 deposit and 600,000 rent against a 150,000,000 jeonse with an 80% loan at 4.2%: monthly rent costs 629,000 and jeonse 508,000 (420,000 interest + 87,500 opportunity cost), so jeonse leaks 121,000 less each month.

Example: 10,000,000 deposit and 600,000 rent → 600,000 + 10,000,000 × 3.5% ÷ 12 ≈ 629,000 a month

Jeonse 300,000,000 with 80% loan at 4.2% → 240,000,000 × 4.2% ÷ 12 = 840,000

Own capital 60,000,000 × 3.5% ÷ 12 = 175,000 → jeonse cost 1,015,000

Under these terms monthly rent leaks about 386,000 less each month

Input ranges: rent deposit 0–100,000,000 (5,000,000 steps), rent 0–2,500,000 (50,000 steps), jeonse deposit 20,000,000–500,000,000 (10,000,000 steps), loan ratio 0–100% (10% steps), loan rate 2.0–7.0% a year

Things to know

The higher the jeonse loan rate is above the deposit rate (3.5%), the worse jeonse looks. In the 300,000,000 example above the rate has to fall to about 2.2% before the result flips, so enter the rate you can actually get.

Jeonse carries the risk of not getting the deposit back. If you take out deposit-guarantee insurance, spread the premium per month and add it to the jeonse side for a fairer comparison.

Tax benefits such as the monthly-rent tax credit or the deduction for jeonse loan repayments are not included. They can shift the gap by tens of thousands depending on income and eligibility, and rates and limits change with Korean tax law.

Maintenance fees, moving costs and agent commissions are excluded; jeonse commissions are based on the deposit and therefore larger.

A 0% loan ratio means paying the whole jeonse deposit yourself, leaving only the 3.5% opportunity cost. That is why the result differs so much between people with and without savings.

To see a full two-year contract, multiply the result by 24: a 100,000 monthly gap is 2,400,000 over two years.

Frequently asked questions

Why charge an opportunity cost on the deposit?

The deposit is returned at the end but tied up meanwhile. The same money in a savings account would have earned interest, so that interest is a genuine cost.

Where does 3.5% come from?

It is roughly the one-year bank deposit rate in the mid-2020s. It is fixed in this tool, so a large move in deposit rates changes the result accordingly.

How high can a jeonse loan ratio go?

Limits are set by the guarantee agency and product, and are cut further by income, credit and DSR rules. The 0–100% slider is only an assumption, and the real limits and criteria can change, so check with a bank.

Why is buying not compared?

This tool compares monthly rent and jeonse only. Buying involves acquisition and holding taxes and price movements, a different structure that needs its own calculation.

The 3.5% deposit rate is an assumption, and taxes, insurance and maintenance fees are excluded. A reference figure, not advice from a financial or property professional.

Monthly Rent vs Jeonse: Opportunity Cost Calculator

Jeonse saves ₩150,000 a month

Fact check

What this tool does

How it is calculated

Things to know

Frequently asked questions